Two years ago, the repeat players in the world of shareholder class action litigation--plaintiffs' and defendants' lawyers, along with D&O carriers and their coverage counsel--consulted fortune tellers (or worse, each other) to foresee how the Private Securities Litigation Reform Act would change their professional lives. Would honest businesses be hit with fewer frivolous claims? Would companies purchase less D&O liability insurance? Would securities litigators have to retool and learn to read patents?
Since then, the revolutionary changes that some hoped (and others feared) would occur have not--yet. With any major reform, it takes time for the new rules to become part of the legal system and begin to alter behavior. The number of district court decisions construing the Reform Act is still small and the volume of appellate decisions is minuscule. But while it's too early to draw long-term conclusions about the efficacy of the Reform Act, various tactical battles during the past two years are worth noting.
Friendly Forum Searches
A hallmark of securities litigation during the last two years has been plaintiffs' search for a hospitable home. The plaintiffs' bar's immediate reaction to the Reform Act was to shun federal court. Particularly in California--which does not have the uniform blue-sky provisions of most states--plaintiffs flooded the …